While the three incumbents have already increased ad spending by 10-15% each since Jio launched services, they are expected to further rev up expenses by at least 20% on year.Devina Sengupta&Delshad Irani | ET Bureau | March 10, 2017, 08:33 IST

MUMBAI: The telecom industry’s pricing war is spreading to advertising, as top carriers Bharti Airtel, Vodafone India and Idea Cellular jacked up spending on promoting their latest price points and services to ring-fence users from jumping ship to Reliance Jio Infocomm.

While the three incumbents have already increased ad spending by 10-15% each since Jio launched services early September, they are expected to further rev up expenses by at least 20% on year each this fiscal through March 2017, heads of advertising and marketing agencies involved in planning telco strategies said.

Jio is expected to raise its spending by 50% on year this fiscal in the firefight to swiftly build on the 100 million user base, especially in the crucial months immediately after it starts to charge for services from April 1. Jio will have to promote its offers to get users to make it the primary SIM. Currently, most of its customers use it as a secondary operator, and for customers to shift loyalty, Jio will have to advertise heavily, experts said. Jio did not respond to ET's query .

ET spoke to ad makers working with these telecos on their marketing campaigns across media platforms. There seems to be a consensus that with Jio rolling out its tariffs, campaigning wars will only intensify. This would pressurise telcos at a time when revenues are falling and margins are thinning, but this is unavoidable, they said.

Arun Iyer, chief creative officer, Lowe Lintas, working on the Idea Cellular account, said the field has become ‘hyper competitive.’ The Kumar Mangalam Birla company brought out a ‘tactical’ television ad that spoke on quality rather than free offers, cocking a snook at the six months of freebies rolled out by Mukesh Ambani-owned Reliance Jio.

“Everybody is currently talking about plans and tariffs. Going forward is when the power of the brands will come in,” said Iyer. Idea Cellular did not respond to ET’s queries. Reliance Jio’s television ads on its new tariff plans are already on air.

The company, however, did not respond to ET’s queries.

According to media analyst estimates, the telecom sector spent Rs 4,500 crore in advertising in 2016. Shashi Sinha, CEO IPG Mediabrands, said that about 35% of these numbers are of telecom operators while the rest mainly are of handset makers. Also, spending on television ads would go up by at least 15% in the next few quarters, now that Jio has started charging customers.

Traditional media like television, print and billboards will continue to find favour with the four-five main operators, but social and digital media, too, will be under spotlight.

“As consumers are increasingly embracing the digital world and preferring to engage via apps and social media platforms, we have strengthened our focus on digital and increased spends in this category by 50%,” said Siddharth Banerjee, executive vice-president (marketing), Vodafone India.

A person familiar with the media planning with one of the top telecom operators also noted the increased “focus” on advertisements, especially digital. Airtel did not respond to an emailed query from ET either.

“The advertising spending is just a start, and we will see more campaigns from the telecom operators from April-May and especially before Diwali. They may bundle offers with handset makers and new phone launches,” said marketing expert Jessie Paul, CEO of marketing advisory firm Paul Writer.

Paul said the total marketing spending is roughly 20%, but the next year can see it go up to 30% at least. However, the spending will also depend on consolidation, calls taken on how much they want to dig into the coffers on advertising later on.

A head of an agency working on one of the top three telcos said that while reacting to Jio’s expected advertising salvo, Idea and Vodafone would have to keep in mind their different set of consumers if their merger goes through.

Vodafone, which has bought TV time during the IPL, an envious slot because of the game’s popularity, is strong with urban subscribers while Idea focusses mainly on a rural, semi-urban user base. If the merger goes as per plan, it would become the largest operator in India by revenue market share and subscribers.

“A lot of what will happen next will depend on how consumers react to Reliance now that it is charging,” said the head of the agency mentioned above, who did not want to be named.

The Telecom Regulatory Authority of India (Trai) pulled up Bharti Airtel and Vodafone Idea for warning subscribers of certain plans that their SIM cards would be deactivated if they do not recharge their pre-paid accounts though these subscribers had the minimum required balance.